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Wisconsin Small Business Recovery Grants

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The Wisconsin Tomorrow Small Business Recovery Grants, funded by the American Rescue Plan Act of 2021 (ARPA), started taking applications yesterday, May 24th, 2021, from businesses affected by the COVID-19 pandemic. The award amount will be $5,000 per business as long as their annual gross revenue is between $10,000 and $7 million. The application deadline is June 7th, 2021 at 4:30 pm.

Application Link – My Tax Account (wi.gov)

FAQs Link – DOR Wisconsin Tomorrow Small Business Recovery Grant

PPP Loan Round 2 Opens January 11

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PPP Loan Availability
Last Friday the SBA and Treasury announced that the second round of the Paycheck Protection Program (PPP) opens today, January 11, 2021, and on Wednesday, January 13, 2021. The exclusive two-day window, on the 11th and 12th of January, is reserved for first-draw PPP loans by community financial institutions that serve minority- and women-owned businesses. Then on the 13th, second draw PPP loans by the same community financial institutions stated above will be available. Shortly after the 13th all participating lenders will have the ability to transmit PPP loans for their clients – there has not been a specified date for when this will occur. There will be $284.5 billion available for these PPP loans, including $35 billion for first-time loans.

Deadline for Applications
March 31, 2021

Calculation of Loan Amount

  • First and Second-Time Borrowers
    • Can receive up to 2.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan
  • PPP Loan Borrowers with NAICS codes starting with 72 (such as hotels and restaurants)
    • Can receive up to 3.5 times their average monthly payroll costs (with a cap per employee of $100,000 annualized) in 2019, 2020, or the year prior to the loan


New Qualified Businesses and Expenditures

  • Businesses
    • Nonprofits including churches
    • Sec. 501(c)(6) business leagues – other restrictions apply
    • News organizations – other restrictions apply
    • Publicly traded companies with certain ownership
  • Expenditures
    • Protective supplies, equipment and modification costs to comply with COVID-19 guidelines
    • Property damage related to vandalism or looting that was not covered by insurance or other compensation
    • Essential expenditures to suppliers to maintain current operations
    • Covered operating expenditures
      • Payments for business software or cloud computing service that is used for business operations
      • Product or service delivery
      • Processing, payment, or tracking of payroll expenses
      • Human resources
      • Sales and billing functions
      • Accounting
      • Tracking of supplies, inventory, records and expenses

Qualifications for First-Draw Applicants (up to $10 million)

  • Operation
    • In operation prior to February 15, 2020
  • Employee Count
    • 500 or fewer employees
  • Employee Count (food services operations)
    • 500 or fewer employees per location

New Qualifications for Second-Draw Applicants (up to $2 million)

  • Revenue Reduction Test
    • Previously a business only had to certify that they had economic uncertainty in order to qualify for the first round of PPP loans. In the second round, businesses, that are requesting a second PPP loan, must prove they have been impacted by showing they have faced at least a 25% reduction in revenue in a quarter compared to the same quarter from the previous year
  • Employee Count
    • 300 or fewer employees
  • First Round PPP Funds Spent Test
    • The borrower must certify that they have used or will use all of the funds from the first PPP loan before receiving the new funds  

Simplified Forgiveness
Borrowers that receive a PPP loan of $150,000 or less will be able to fill out a simplified, one page, forgiveness application. The SBA has not released this simplified form yet, but they have a deadline of January 20, 2021. When applying for forgiveness, applicants must use at least 60% of the funds for payroll between 8 or 24 weeks.
 
 
Please stay safe and healthy.

Paycheck Protection Program Flexibility Act (PPPFA) has been officially signed

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On June 5th, 2020, the Paycheck Protection Program Flexibility Act (PPPFA) was officially signed which will positively impact businesses and self-employed individuals who have received or will be applying for the Paycheck Protection Program (PPP) Loans. Below will be a list of how the PPPFA enhances the PPP Loans:
 

  • Businesses can continue to defer Social Security taxes through the end of 2020
  • The percentage of the loan that was required to be used for payroll costs was decreased from 75% to 60%
  • The 8-week period to use the funds has been increased to 24 weeks or 12/31/2020 if earlier
  • The deadline for employers to return to prior employment / wage levels has been extended from June 30th, 2020 to December 31st, 2020
  • The period of loan maturity has been increased from 2 years to 5 years
  • Borrowers can now defer payments until the amount of loan forgiveness is determined

 
Businesses that received their funds before the PPPFA are not forced to abide by the regulations provided by the PPPFA, but they can elect to use them. Also, we want to remind business owners who have not received the loan that these loans still need to be applied for before June 30th, 2020 as that date has not been extended. 
 
Please stay safe and healthy.
The Mitz & Rozansky Team

The Cares Act and You

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Due to the recent economic disaster, COVID-19, the government has been working diligently on different plans to help businesses across the country. The two plans that will affect most of our clients at Mitz & Rozansky, SC are The CARES Act and the Families First Coronavirus Response Act. We have conducted extensive research on the two acts and will continue to monitor all activity that is relevant.  We want to assure you that we are doing everything possible to help you through these difficult times. The following narrative summarizes the two acts.

THE CARES ACT

This act was brought about to help provide economic relief through the source of a relievable loan for businesses that are encountering difficult times during this economic disaster. In order to receive this loan, the business must be directly affected, offer services to a directly affected business or be indirectly harmed by losses in their communities. Once qualified, the business will then go through a screening process where it provides a variety of different financial items to determine the maximum loan it qualifies for. The calculation will be the lesser of 2.5 times the average monthly payroll from the year prior to applying for the loan or 10 million dollars. For example, if someone applied for a loan on March 31, 2020 the payroll information needed will be from March 31, 2019 – March 31, 2020. The money can only be used for fixed debts such as mortgage interest and rent, payroll and certain utility payments. The balance used will have a maximum interest rate of 4%, which will be the only payment the employer is responsible for if the funds are used properly and there are no layoffs. If the funds are not used properly there will be a calculation of the portion of the principal balance that will not be forgiven. Unforgiven balances will have to be repaid within 10 years. It will be very important to keep detailed records of the balance and the expenses that were deducted from the balance as the business will need to supply these expenses to verify they are in accordance with the rules. 

We do not know how long these loans will take to process, but they have implemented an emergency grant to provide $10,000 of the loan, immediately.

Other facts – employees with wages over $100,000 do not qualify, personal guarantees are required for loans over $200,000 and there are no costs to apply.

FAMILIES FIRST CORONAVIRUS RESPONSE ACT (FFCRA)

In addition to The Cares Act, the government has also implemented the Families First Coronavirus Response Act (FFCRA) to assist employees with paid leave, who are unable to continue to work due to the effects of COVID-19.  This act does not apply to all businesses. If a Company has less than 50 employees and can prove that the continuation of paid leave would jeopardize the viability of the business as a going concern, it does not need to comply. The FFCRA protects both full time and part time employees who have been employed by the Company for at least 30 days. There are six different ways an employee can qualify for paid leave under this act which will alter how much they are paid, either full wage or 2/3 wage, and how long they will be able to receive those benefits, 80 hours or 480 hours. Part time employees have prorations based on average hours for a two-week period, excluding unusually high or low work weeks. The Company will receive a dollar-for-dollar tax credit for all qualifying wages paid under FFCRA and will also receive tax credits for amounts incurred to maintain health insurance coverage. 

*Proceeds from The Cares Act can’t be used to pay leave under the FFCRA because the Company would be receiving a tax credit for the wages paid without using the Company’s funds. 

Other facts – the first 10 days of leave are unpaid but can be supplemented with accrued PTO, sick leave or vacation days and if an employee’s rate of pay is below minimum wage their hours are required to be raised to minimum wage.

We will help you however we can as you navigate this loan application process. Please call or email if you need help.

Please stay safe and healthy.

Best regards, 

The Mitz & Rozansky Team

A Qualified Charitable Contribution (QCD) can provide you with substantial benefits

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If you own an IRA and are 70 1/2 or older, a Qualified Charitable Contribution (QCD) can provide you with substantial benefits. At 70 ½, IRA owners are required to make an annual minimum withdrawal (RMD). A qualified charitable distribution can satisfy all or part the amount of your required minimum distribution from your IRA and, at the same time, reduce your taxable income. Using this strategy can benefit both you and your designated charity.

Here’s how it works. A direct transfer is made from your IRA account by your plan to a qualifying charity. This helps the charity. Qualifying charities must be a 501(c)(3) organization that is eligible to receive tax-deductible contributions. Please note that fund distributions made directly to you do not qualify.

The contribution amount, while satisfying all or part of your annual RMD, can in most cases be deducted from your taxable income, potentially lowering your income tax liability.

QCD requirements:

  • You must be 70½ or older to be eligible to make a QCD.
  • QCDs are limited to only the amount that would otherwise be taxed as ordinary income. Non-deductible contributions are excluded.
  • The QCD maximum annual amount is $100,000. It is the total sum QCD contributions made to any and all charities in a calendar year. Your spouse can also make a QCD from his or her own IRA within the same tax year for up to $100,000.
  • For a QCD to count towards your current year’s RMD, the funds must come out of your IRA by your RMD deadline, generally December 31.
  • You are not permitted to count any amount donated above your RMD toward satisfying a future year’s RMD.

Tax Reporting:

While a QCD is not subject to Federal withholding, State tax rules may vary.

A QCD contribution requires you to receive the same type of acknowledgement from the charity of the donation you would need to claim any other deduction for a charitable contribution.

Your Mitz & Rozansky tax adviser can help you determine if both your IRA and charity qualify for QCDs. Please contact us at (414)352-3200 to discuss how a QCD can work for you.

Highlights of the New Tax Reform Law for 2018 and Beyond

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The new tax reform law, commonly called the “Tax Cuts and Jobs Act” (TCJA), is the biggest federal tax law overhaul in 31 years, and it has both good and bad news for taxpayers. For information on how the new law affects your taxes, please contact Mitz & Rozansky at (414)352-3200 to learn more.

Below are highlights of some of the most significant changes affecting individual and business taxpayers. Except where noted, these changes are effective for tax years beginning after December 31, 2017.

Individuals

  • Drops of individual income tax rates ranging from 0 to 4 percentage points (depending on the bracket) to 10%, 12%, 22%, 24%, 32%, 35% and 37% — through 2025
  • Near doubling of the standard deduction to $24,000 (married couples filing jointly), $18,000 (heads of households), and $12,000 (singles and married couples filing separately) — through 2025
  • Elimination of personal exemptions — through 2025
  • Doubling of the child tax credit to $2,000 and other modifications intended to help more taxpayers benefit from the credit — through 2025
  • Elimination of the individual mandate under the Affordable Care Act requiring taxpayers not covered by a qualifying health plan to pay a penalty — effective for months beginning after December 31, 2018
  • Reduction of the adjusted gross income (AGI) threshold for the medical expense deduction to 7.5% for regular and AMT purposes — for 2017 and 2018
  • New $10,000 limit on the deduction for state and local taxes (on a combined basis for property and income taxes; $5,000 for separate filers) — through 2025
  • Reduction of the mortgage debt limit for the home mortgage interest deduction to $750,000 ($375,000 for separate filers), with certain exceptions — through 2025
  • Elimination of the deduction for interest on home equity debt — through 2025
  • Elimination of the personal casualty and theft loss deduction (with an exception for federally declared disasters) — through 2025
  • Elimination of miscellaneous itemized deductions subject to the 2% floor (such as certain investment expenses, professional fees and unreimbursed employee business expenses) — through 2025
  • Elimination of the AGI-based reduction of certain itemized deductions — through 2025
  • Elimination of the moving expense deduction (with an exception for members of the military in certain circumstances) — through 2025
  • Expansion of tax-free Section 529 plan distributions to include those used to pay qualifying elementary and secondary school expenses, up to $10,000 per student per tax year
  • AMT exemption increase, to $109,400 for joint filers, $70,300 for singles and heads of households, and $54,700 for separate filers — through 2025
  • Doubling of the gift and estate tax exemptions, to $10 million (expected to be $11.2 million for 2018 with inflation indexing) — through 2025

Businesses

  • Replacement of graduated corporate tax rates ranging from 15% to 35% with a flat corporate rate of 21%
  • Repeal of the 20% corporate AMT
  • New 20% qualified business income deduction for owners of flow-through entities (such as partnerships, limited liability companies and S corporations) and sole proprietorships — through 2025
  • Doubling of bonus depreciation to 100% and expansion of qualified assets to include used assets — effective for assets acquired and placed in service after September 27, 2017, and before January 1, 2023
  • Doubling of the Section 179 expensing limit to $1 million and an increase of the expensing phaseout threshold to $2.5 million
  • Other enhancements to depreciation-related deductions
  • New disallowance of deductions for net interest expense in excess of 30% of the business’s adjusted taxable income (exceptions apply)
  • New limits on net operating loss (NOL) deductions
  • Elimination of the Section 199 deduction, also commonly referred to as the domestic production activities deduction or manufacturers’ deduction — effective for tax years beginning after December 31, 2017, for noncorporate taxpayers and for tax years beginning after December 31, 2018, for C corporation taxpayers
  • New rule limiting like-kind exchanges to real property that is not held primarily for sale
  • New tax credit for employer-paid family and medical leave — through 2019
  • New limitations on excessive employee compensation
  • New limitations on deductions for employee fringe benefits, such as entertainment and, in certain circumstances, meals and transportation

More to consider

This is just a brief overview of some of the most significant TCJA provisions. There are additional rules and limits that apply, and the law includes many additional provisions. Contact Mitz & Rozansky at (414)352-3200 to learn more about how these and other tax law changes will affect you in 2018 and beyond.

© 2017

 

2017 Tax Planning Guide Is Now Available

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With the possibility of significant tax reform legislation this year, tax planning is more complicated yet more important than ever. To save the most, you need to be sure you’re taking advantage of every tax break you’re entitled to.  Our 2017 Tax Planning Guide can help you follow current tax law with an eye on what could happen in the future with any possible legislation.

 

To view it, simply click here or visit our website, where you can view the guide and learn about important tax law changes and ways to minimize your income tax liability.

As you look through the guide, please note the strategies and tax law provisions that apply to your situation or that you would like to know more about. Then contact us with any questions you may have about these or other tax matters.

At Mitz & Rozansky, SC, our professionals are thoroughly familiar with the latest tax law and tax-reduction strategies and are eager to help you take advantage of them. So please call us today (414) 352-3200 to schedule a time to talk about ways to lighten your tax burden and better achieve your financial objectives.

Why Your Tax Returns Need to be Prepared by a Qualified Professional

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Now more than ever, it is extremely important that as tax payers you utilize qualified tax professionals who will prepare your tax returns and will represent you should you be audited. Too often, tax payers hire someone who does not have the proper licenses and credentials required to be qualified to represent them, particularly given the complexity of the ever changing tax code.

The Tax Code Has Changed
As of January 1, 2016 the IRS tax code requires that anyone representing a taxpayer be qualified according to IRS specifications.  To be sure that you will not have to seek additional services to represent you to the IRS, your tax preparation needs to be done by a CPA, Enrolled Agent (EA) or an attorney who is IRS qualified. Tax preparers, who do not otherwise qualify, can also complete the IRS’s voluntary Annual Filling Season Program. Only those who successfully complete the program, receive a Record of Completion allowing them to represent you to the IRS.

Employing qualified professionals not only assures that your tax returns are properly prepared, but it also provides you with a representative who can stand in for you at appearances before the IRS for such issues as audits, appeals and collections. They can speak to directly to an IRS representative on your behalf as well as make appearances for you at IRS hearings involving your tax returns.

At Mitz & Rozansky, LLC our CPA’s and tax preparation specialists prepare your tax return with the utmost care. They work diligently to ensure that you pay only the taxes required and they stand ready to represent you up should any tax related issues arise with the IRS. For additional information about this or any other accounting related matters, please contact us by phone at (414)352-3200 or via email at info@mrsc.com.